The Arab spring has finally had an impact on the core issue of the region, the Israeli-Palestinian conflict. It came in the form of a draft agreement between Fatah and Hamas which took everyone by surprise. There are three chief reasons why, after four years of bitter and violent conflict between the rivals, Fatah acceded to all of Hamas's political conditions to form a national unity government.

The first was the publication of the Palestine papers, the secret record of the last fruitless round of talks with Israel. The extent to which Palestinian negotiators were prepared to bend over backwards to accommodate Israel surprised even hardened cynics. The Palestinian Authority found itself haemorrhaging what little authority it had left. The second was the loss to the Palestinian president, Abu Mazen, of his closest allies in Hosni Mubarak and his henchman Omar Suleiman. While they were still around, Gaza's back door was locked. But the third reason had little to do with either of the above: Abu Mazen's faith in Barack Obama finally snapped. For a man who dedicated his career to the creation of a Palestinian state through negotiation, the turning point came when the US vetoed a UN resolution condemning Israel's settlement-building. In doing so, the US vetoed its own policy. To make the point, the resolution was drafted out of the actual words Hillary Clinton used to condemn construction. Fatah's frustration with all this has now taken political form.

Israel's politicians reacted darkly to the news of reconciliation. From right to left, they shared an assumption which is out of date. It is that they retain the ability – and the right – to dictate what sort of state Palestinians will build on their borders. Having spent years fashioning the environment, the penny has yet to drop that a future environment composed of free Egyptians, Jordanians and even possibly Syrians could well fashion Israel's borders. Even after Mubarak fell, the consensus was that Cairo was so preoccupied with internal problems that it lacked the energy to make foreign policy.

Not so. Yesterday foreign minister Nabil al-Arabi announced that Egypt would shortly be lifting the siege of Gaza. These events pose a direct challenge to the status quo that Israel, the US and the EU have fashioned. Do they now subvert the will of the Egyptians they claim to champion? Does the US do what it did the last time Fatah and Hamas reconciled at Mecca, and pull the plug on the unity government? Do the Quartet threaten to withdraw the PA's funds, because, as is very likely, Salam Fayyad will no longer be there to disburse them? The US could twist Fatah's arm, but Fatah might just sign on the dotted line all the same.